<Q: What about QCOM [Qualcomm]?
A: Qualcomm is my second-largest holding and my favorite tech stock. Whether
Qualcomm's [wireless] standard, CDMA 2000,
or WCDMA wins, Qualcomm will get paid either way. So ultimately, Qualcomm will
control the licensing rights to all of the
world's wireless technologies. We also believe that they will maintain a very high share of
wireless base-band chip sets, which is
even more profitable for them than their licensing and royalties -- in terms of absolute
dollars. > What so hard to understand, or Swallow? vbg........
BusinessWeek Online
INVESTING -- "The Market Is Poised for a Much
Better 2002"
Personal Investing: INVESTING Q&A
The stock market will continue to rally into the first half of 2002 in anticipation of an economic
recovery later in the year, according to Jeff Van Harte, senior vice-president and head of
equities for Transamerica Investment Management.
Consequently, Van Harte sees a number of opportunities for the growth strategy of investing he practices for Transamerica. Chief
among them is the PC market, where he sees Microsoft and Intel benefiting from system upgrades and VeriSign profiting mainly
from its control of dot-com registration names.
Among Van Harte's other top sectors is transaction processing for credit and debit cards, where he likes First Data and Concord
EFS. He also points to cable TV and drugstore retailing as areas with good growth potential. In general retailing, he's high on
RadioShack, a stock he has added to his fund since Sept. 22. Another of his favorites -- and his second-largest holding -- is
Qualcomm, which he points out will wind up controlling the licensing rights for the world's wireless technologies.
Van Harte made these points in a chat presented Nov. 15 by BusinessWeek Online on America Online, in response to questions
from the audience and from Jack Dierdorff and Karyn McCormack of BW Online. Edited excerpts from the chat follow. A full
transcript is available from BusinessWeek Online on AOL at keyword: BW Talk.
Q: Do you think that the market will continue its upward movement if nothing else serious happens in the world situation?
A: Three negative years of equity returns would be unusual, so I believe that the market is poised for a much better 2002. A lot of
companies have right-sized their business for significant earnings growth when the economy picks up, and I believe that will be in
the second half of 2002. The stock market is already beginning to discount that and should continue to move up in the first half of
2002.
Q: Jeff, you're a growth investor, so in what areas are you seeing the biggest growth in earnings as the economy recovers next
year?
A: I think that one of the areas poised for a rebound is the PC sector, which will be driven by a new Microsoft operating system,
XP, and hardware that is beginning to become obsolete from Y2K purchases. Microsoft (NasdaqNM:MSFT) and Intel
(NasdaqNM:INTC) are especially well positioned to benefit from the next upgrade cycle.
Another area of growth would be transaction processing. There, we particularly like credit-card and debit-card processors.... In
particular, we like First Data (NYSE:FDC - news) and Concord EFS (NasdaqNM:CEFT). First Data is the leading credit-card
processor in the world [see BW, 11/26/01, ``First Data: A Tech Stock with a Twist''], and Concord EFS is a leading processor of
debit cards.
Q: What type of stocks do you think will have steady growth in the next few years?
A: One of the most interesting sectors is the cable-TV industry, which has very steady growth characteristics. The growth rate is
picking up by 1% to 2%, as cable subscribers upgrade to digital TV and high-bandwidth Internet services. This should take their
growth rate from 11% to about 13%.
Another very steady area is drugstore retailing. Comparable-store sales are running 8% to 10% up and are driven by strong
pharmacy purchases and the aging demographics of the population.
Q: Which software companies are going to show the most growth? You've mentioned Microsoft.
A: In addition to MSFT, a company we own that has tremendous potential is VeriSign (NasdaqNM:VRSN). They control the
standard for digital certificates and also the registry for dot-com names. We think that both of these areas are very fast-growth
areas, and that the company can sustain 25% to 30% growth for the next five years.
Q: Which drugstore retailers do you prefer?
A: Companies that are improving their situations, such as Walgreen (WAG), and as a turnaround candidate, Rite Aid (RAD).
Q: What about QCOM [Qualcomm]?
A: Qualcomm is my second-largest holding and my favorite tech stock. Whether Qualcomm's [wireless] standard, CDMA 2000,
or WCDMA wins, Qualcomm will get paid either way. So ultimately, Qualcomm will control the licensing rights to all of the
world's wireless technologies. We also believe that they will maintain a very high share of wireless base-band chip sets, which is
even more profitable for them than their licensing and royalties -- in terms of absolute dollars. |
